298 pages of problems at USPTO

U.S. Patent and Trademark Office: Transforming to Meet the Challenges of the 21st Century

A panel of experts has made dozens of recommendations for fixing management and workforce problems at the U.S. Patent and Trademark Office, an agency increasingly criticized for the quality of its work and a mounting backlog of patent applications.

Changing interpretations of patent law and individual and corporate inventors' growing interest in claiming intellectual property rights have exacerbated USPTO's labor and management problems and flooded the agency with new patent applications, according to a 298-page report that the National Academy of Public Administration published last month. USPTO and a subcommittee of the House Appropriations Committee requested the study.

Referring to the size of the report, Laurie May, senior project adviser at NAPA, said that "once we got into it, we felt it was important to make this replete and to try to provide in one place almost a reference book on the inner workings of the agency."

The NAPA panel found numerous organizational weaknesses at USPTO — many of the same ones congressional auditors highlighted in a June Government Accountability Office report. But GAO's auditors did not go as far as the NAPA panel did in describing an unhealthy agency. The NAPA panel concluded that USPTO must be restructured to operate more like a business. They proposed that lawmakers make the agency a wholly owned government corporation subject to congressional oversight, like the U.S. Postal Service.

The panel was critical of USPTO managers for neglecting to follow through with actions that, although common in industry, would have required them to negotiate with the agency's powerful patent examiners union, the Patent Office Professional Association.

NAPA's report describes USPTO as a technical agency with a highly educated workforce. Its technically oriented managers have a self-reliant, can-do attitude and have ignored many recent management innovations that others have used to transform public agencies and businesses, according to the report.

The panel members said they found that supervisory patent examiners often retain an "anti-management mind-set" even after being selected for promotion.

The panel praised USPTO's managers for planning and successfully executing one of the largest and most complex moves of federal civilian employees and computer databases when the agency moved into new headquarters earlier this year.

But it found those same managers less adept at dealing with complex workforce challenges.

The greatest of those is historically high attrition rates, especially among newly hired patent examiners. In fiscal 2004, the average attrition rate was 10.1 percent for patent examiners who review applications for computer architecture and information security software.

The NAPA panel blamed the lack of significant management innovations at the agency for high employee turnover, noting that the incentive system used to reward patent examiners essentially hasn't changed since 1976.

Because of the high turnover, only 45 percent of patent examiners have been on the job for more than five years. Agency officials say an examiner needs five to seven years on the job to become proficient. The panel found that USPTO lacks an adequate number of seasoned patent examiners to operate efficiently.

Senior USPTO officials attribute the high turnover mostly to recent graduates' lack of understanding of the world of work and to the solitary and repetitive nature of the work that patent examiners do. Senior officials say some examiners discover that the work does not suit them only after they have held the job for a couple of years.

Faced with an urgent need for more patent examiners, USPTO hired about 940 new examiners in fiscal 2005, a 25 percent staff increase, said Jon Dudas, the agency's director. "We plan to hire an additional 1,000 patent examiners each fiscal year through fiscal year 2011," Dudas testified at a congressional hearing Sept. 8.

Beginning in January 2006, he said, USPTO will introduce a completely revamped training program for new patent examiners. The agency will offer training "in a collegial and collaborative environment, providing up to eight months of intensive coursework on examination and relevant legal issues," he added.

NAPA's report notes that European and Japanese patent agencies have avoided attrition problems but adds that examiners in those agencies have fewer applications to process and more time to spend on each one.

Some reform proponents say the incentive system for patent examiners needs overhauling. Examiners are under pressure now "to issue as many patents as possible to as many businesses as possible," said Jason Schultz, staff attorney at the Electronic Frontier Foundation, a public interest group focused on digital technologies. A better incentive system would reward examiners for the quality of patents issued, he said.

The panel's many recommendations for reform include creating a new position of vice president or associate commissioner of management. Many agencies abolished similar positions in the mid-1980s to save money, but the panel members said such positions are needed to coordinate management decisions, such as whether to shift money from hiring new examiners to information technology.

According to the NAPA report, the new position would help senior agency officials "understand what needs to be done to re-position the organization and its resources for changing times."

A management blueprint for USPTO

The National Academy of Public Administration convened a panel of management experts to examine workforce and other issues at the U.S. Patent and Trademark Office. The panel members' report contains numerous recommendations for improving the agency.

To deal with long-standing workforce and management problems that affect the timeliness of patent-application processing, the panel advised USPTO to:

• Increase compensation for patent examiners to the levels of bank regulators by replacing the General Schedule with a more flexible system.
• Develop new pay incentives and training programs to help supervisory patent examiners reduce the high attrition rate among new nonsupervisory examiners.
• Adopt innovative management strategies to create a more positive and collaborative organizational culture.

Source: National Academy of Public Administration